It is common for tax regulations to change every year, e.g., tax rates and brackets are adjusted, and new regulations change the social security wage base, among other things.
For 2023, the maximum assessment base for social security contributions has increased and the monthly limit from which wages are taxed at 23 percent has been raised. Many employers may therefore be keen on the possibility of applying a discount on insurance premiums for selected “vulnerable” employees in part-time employment.
Also, after almost 20 years, the income threshold for the obligation to file a personal income tax return has been significantly increased.
The impact of the tax measures highlighted in this newsletter will depend on each taxpayer’s particular set of facts and circumstances. However, in many instances, we expect that an employee’s Czech tax burden will decline as a result of these changes, which should help employees to some extent with the recent rise in the cost-of-living.
Given the impact of these changes to the operation of payroll/shadow payroll, the changes should be communicated to relevant stakeholders as soon as possible, to help ensure that payroll processes and software can be updated in a timely fashion.